Analysis on the Bullish Chinese EO Market

Echemi2018-11-19

Amid the bullish sentiments, there are still risks.

Ethylene prices slumped a few days ago, and rebounded obviously recently.

Ethylene prices declined from the high point - $1,300/mt to $920/mt. It was heard that the lowest price had hit $850/mt. However, no trading activities were heard. In recent days, the dealing prices of ethylene have inched up to $970/mt. Some dealing prices have reached $1,000/mt. These increases boosted the market and supported the production cost of ethylene oxide (EO).

Ethylene glycol prices hit the lowest point this year and continued fluctuating.

Ethylene glycol market prices continued the downtrend recently and the prices moved down by 10% or so. Weak fundamentals and tepid demand were the major reason. Latest prices were RMB 5,750/mt, being close to the production cost. The weak ethylene glycol market impelled the increases in EO production.

The operation of newly-added units will pressure the market.

The 200kt/a EO unit in Taixing Jinyan Chemical had been put into operation, and the products haven’t been put into the market. Most players show a wait-and-see position. If the goods come to the market, the supply of EO will increase.

On the whole, the bearish fundamentals still impact the EO market. From the demand aspect, it is fairish. Most downstream users’ stocks are at low levels. Most players are cautious about the market. The EO market is expected to remain stable.